Options Trading News

November 26, 2013  Tue 2:45 AM CT

Utilities have been weak, but one investor apparently thinks that Public Service Enterprise will keep grinding higher.

optionMONSTER's tracking systems yesterday detected the purchase of 1,800 March 35 calls for $0.60 and the sale of an equal number of June 35 calls for $0.81. Volume was below open interest in the nearer-dated contracts, which suggests an existing short-call position was closed and rolled forward in time.

The trader probably owns shares in the New Jersey utility company and had sold the March options as part of a covered-call strategy. He or she is now rolling that position forward in time, getting an additional $0.21 premium in the process and extending the trade by three months. The investor can also keep collecting the name's rich 4.3 percent dividend. (See our Education section)

PEG fell 0.57 percent to $33.42 yesterday but is up about 9 percent so far this year. That's slightly worse than the broader utility sector, while the S&P 500 index has gained 26 percent in the same period.

Total option volume was 32 times greater than average in the session.
Share this article with your friends


Premium Services

Education & Strategy

The art of trading

As I stated in last week's article, a break out or a break down needs to have a couple things happen before it is considered a confirmed break out or break down. The only problem is that in today's market where things move much more quicker than they did just a few years ago, two days could wind up being the majority of the expected movement, if not the whole movement.

View more education articles »